Seventeen US financial firms paid US$1.7 billion in “ill-advised” bonuses to executives while being bailed out by public money at the height of the financial crisis, US President Barack Obama’s pay czar said on Friday.
Kenneth Feinberg, the Obama administration’s special task master for compensation, also proposed that companies adopt a policy in which excessive salary and bonus payments were barred during financial crises.
Among firms he cited were top Wall Street banks Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, Bank of New York Mellon and Wells Fargo, as well as insurance giant American Internaional Group.
They made the payments while receiving public bailout money during a period from October 2008 to February last year, he said.
Most of the firms cited have repaid the US taxpayer aid.
They did nothing illegal as rules at that time allowed these kinds of payments, but the decision reflected “bad judgment,” Feinberg said.
“It was ill-advised. This wasn’t illegal,” he said. “They violated no” rules, he added.
In a report as part of his review of 419 firms that received US federal bailout funds, Feinberg called on companies to adopt a key provision allowing them to set aside compensation contracts during financial crises.
Many firms had contended that they were legally obliged to provide substantial payments to staff under contracts that were drawn up before the financial crisis which climaxed in late 2008 and dealt a heavy blow to the economy.
“In a crisis situation, a firm would have authority to restructure, reduce or cancel payments to executives — and not be bound by ‘guarantees,’” the report said.
Voluntary Proposal
Under the “entirely voluntary” proposal recommended for “wide adoption,” if a company’s board of directors has identified that the firm is in a crisis, its compensation committee should have the authority to review and cancel any pending payments to executives.
“And this authority would supersede any rights and entitlements executives have in normal circumstances,” the report added.
Feinberg made the proposal directly to the 17 firms, which were identified based on payments of bonuses, new stock grants, so-called “golden parachutes” and other types of compensation, the report said.
The pay czar will provide a set of principles “to guide” companies adopting such a compensation committee policy.
They will “provide flexibility for each firm, working with its regulator, to adopt a policy tailored to its particular business and circumstances,” the report said.
Reacting to Feinberg’s report, a top US financial services umbrella group said it would study his proposal.
“Financial services companies have already strengthened compensation practices to better align the long-term interests of employees with that of shareholders and consumers,” said Steve Bartlett, president and chief executive officer of the Financial Services Roundtable.
“We look forward to reviewing these recommendations to further strengthen our current practices,” Bartlett said.
The domestic unit of the Chinese-owned, Dutch-headquartered chipmaker Nexperia BV will soon be able to produce semiconductors locally within China, according to two company sources. Nexperia is at the center of a global tug-of-war over critical semiconductor technology, with a Dutch court in February ordering a probe into alleged mismanagement at the company. The geopolitical tussle has disrupted supply chains, with some carmakers reportedly forced to cut production due to chip shortages. Local production would allow Nexperia’s domestic arm, Nexperia Semiconductors (China) Ltd (安世半導體中國), to bypass restrictions in place since October on the supply of silicon wafers — etched with tiny components to
Taiwan is open to joining a global liquefied natural gas (LNG) program if one is created, but on the condition that countries provide delivery even in a scenario where there is a conflict with China, an energy department official said yesterday. While Taiwan’s priority is to have enough LNG at home, the nation is open to exploring potential strategic reserves in other countries such as Japan or South Korea, Energy Administration Deputy Director-General Chen Chung-hsien (陳崇憲) said. While the LNG market does not have a global reserve for emergencies like that of oil, the concept has been raised a few times —
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
AI-FUELED DEMAND: The company has been benefiting from the skyrocketing prices for DRAM chips amid the AI frenzy, especially its core product — DDR4 DRAM chips DRAM chipmaker Nanya Technology Corp (南亞科技) yesterday reported that its revenue for the first quarter surged 582.91 percent to NT$49.09 billion (US$1.54 billion) from NT$7.19 billion a year earlier, as the supply crunch caused chip price spikes. Last quarter’s figure is the highest on record. On a quarterly basis, revenue jumped 63.14 percent from NT$30.09 billion, the company said. In January, Nanya Technology expected global DRAM supply scarcity to continue through the first half of 2028, thanks to strong demand for artificial intelligence (AI) applications. Market researcher TrendForce Corp (集邦科技) forecast prices of standard DRAM chips would rise between 58 percent and 63
RSS